|
The
first choice for people in pensions Pensions
Age has been designed to provide pensions professionals with a single
and authoritative source |
|
Don't
go! The importance of offering employees a good benefits package is simple to fathom. After all, when faced with either choosing to be employed by a company that doesn’t offer a benefits package over one that does, salary being equal, most would choose the latter. The fact that today’s social landscape has changed immensely has had a noticeable impact on the labour force. There are now more people working from home and many are taking advantage of job sharing where it is offered. Many studies have shown that the workforce in the UK, especially those who are taking they’re first steps into the world of work, are recognising that they may have to look for employment nationally rather than where they grew up, for enhanced career prospects in the long-term, making the workforce less tied down to one place. This has meant that employers in a range of industries are putting more effort into finding ways to attract staff, as well as keep hold of them once they have them. These factors may be one reason why flexible benefits have experienced a real growth of late. It is no surprise that companies are recognising their value. A recent survey conducted by Deloitte & Touche reported that 33 per cent of companies have had problems retaining staff in the last five years, with 5 per cent reporting that they were having problems retaining staff at board level and senior executive level. Flexible benefits provide the employee with the opportunity to choose their benefits to suit their own needs and requirements, e.g. medical assurance rather than life assurance, or childcare over additional holiday. Typical benefits include a range of core benefits such as pension, holiday, private medical insurance, private health insurance, dental and life assurance. How these benefits are taken will then have an impact on pay. However, employees’ lifestyle changes have meant that benefits such as gym membership, car policies, shopping and education vouchers are emerging as attractive choices, depending on the needs of that particular employee. Research done by consultants Towers Perrin, indicates that employers are recognising the importance of flexible benefits in retaining and recruiting employees. Martyn Phillips, a consultant within benefits strategy at Towers Perrin said: “Our recently published survey, Benefits Packages of the Future, was completed by 169 human resources professionals from 15 different sectors and looked towards the future for benefit provisions. One of the questions we raised was around the advantages and disadvantages of flexible benefits. Of those who responded, 85 per cent said that flexible benefits do help with recruitment and retention, so the feedback from the market is that it really does help.” Les Dench, director of Entegria has noticed a visible change in the types of companies that are interested in flex. He says: “A couple of years ago it was very much IT companies or financial services organisations that would approach us, but now there is interest from telecoms manufacturers and blue collar organisations. It’s quite a wide range of sizes of organisations as well.” The increased research that is being produced by companies around benefits packages illustrates its importance. Cathy O’Bright, a senior consultant at Hewitt Associates, claims that this helps the employer understand what is required and how to attract employees: “The fact that employers can extend the menu of benefits to cater for employees’ needs would help to retain employees. We are seeing many employers following up after flexible benefits are rolled out, to find out whether it worked towards meeting their needs, either through focus groups, or surveys or questionnaires.” She adds that employers are also examining enrolment data to look at the selection of different choices in that year, and then compare it to when they had a standard plan. However, some believe that flex is much more important for retaining staff than recruiting. Phillips claims studies have shown that in terms of recruitment, flexible benefits have a small impact. He says: “Once the employee gets used to the flexibility around benefits, moving to somewhere without that flexibility can be quite hard, because they can see the value of that plan. There is a much more mobile workforce these days, and employees are looking for employers who can provide them with more that just a salary and benefits. It’s more around the culture of the organisation and what is on offer in terms of the total rewards package, for example, training and the way they develop their employees.” Aside from the effects on employees, employers recognise the advantages of cost saving when they offer flexible packages. Dench asserts that the cost of implementing flex can be as costly or as cheap as the company wants it to be. He says: “The key to low cost flex is a carefully constructed plan and a good administration system, either in house or external.” He adds that such benefits are being recognised and pushed through at budget level. “We are finding that a lot of the interest we have is not just from the HR people but from finance people. Therefore they make sure there is a budget available, and that it is driven through, which is a major change.” A survey conducted by Hewitt Associates into employer attitudes to flexible benefits found that administration was still the most prevalent perceived drawback to implementing flex, and was one of the considerations in the very early stages of planning. Despite this, most organisations recorded that their solutions for administration matched their requirements well. There is no doubt that the internet has smoothed the process, offering cost effectiveness through increased efficiency for the employer as well as benefit modelling for the employee so that they become much more engaged and can do “what-if” scenarios to choose benefits that suit them. O’Bright explains: “The internet can help differentiate different companies in the market. Some employers provide websites where employees can access their package to look at what their total flex fund looks like, all the different options they have, and how they want that flex fund delivered.” Not only does this have the advantage of allowing employees to access their package from home, to discuss options with their partners or families, but it allows updates to the packages to be provided straight away. Though there are a wide range of benefits on offer within flexible packages, pensions are still considered an important benefit offered within the core range. Dench asserts: “A lot of the organisations we are dealing with, whether its defined benefits or defined contribution, offer pensions in a core benefit as they don’t want employees to opt out of pensions altogether. For a defined contribution scheme, what an individual might choose is a reduction in the employer contribution and money going into other things like healthcare. For defined benefit schemes a lot of people are perhaps forgoing things like a holiday, and putting money into AVCs.”
Looking foreword, research has shown that the number of flexible
benefit plans in operation continues to increase. However, the concept
of flex needs to be expanded, and developed according to Deloitte’s
Ashton. He says: “Reward strategies should not cover just benefits,
it should actually apply to the whole working environment. It can
be implemented to apply for allowing more flexibility in hours of
work or job sharing. It should also apply to equity incentives and
share options as it those areas that companies are missing out on.”
BACK
TO SEPTEMBER FEATURES
|
 |
|